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Illumina Saw 'Strong' Q4 Array Performance, Driven by Growth in HumanCore, Custom Products

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Illumina CEO Jay Flatley provided an update on the company's array business at the JP Morgan Global Healthcare Conference in San Francisco this week.

During his presentation, which was webcast, Flatley provided preliminary revenue numbers for the fourth quarter of 2012. For the three months ended Dec. 31, Illumina had unaudited revenues of about $309 million, an approximate 25 percent improvement over Q4 2011 revenues.

"We finished the year extremely strong despite a challenging macroenvironment," said Flatley, referring to concerns about a potential 8 percent across-the-board reduction in the US federal budget, known as sequestration, that could impact government science funding.

"Unfortunately we did not get clarity around sequestration that we were hopeful to get at the end of the year and we are left with some remaining uncertainty that looks like it is going to go until the end of the first quarter," Flatley said. "Surprisingly, we didn't feel any specific impact of that on our business or on our customer behavior" in Q4, he added.

Flatley has told investors in the past that the company believes sequestration is unlikely, and and that the NIH budget will instead be flat in coming years (BAN 9/18/2012).

Though Flatley credited the company's MiSeq sequencing system with driving Q4 revenue growth, he also portrayed the firm's array business as healthy.

"While arrays weren't a strong contributor to our growth in 2012, the rumors of the demise of this business are very exaggerated," Flatley said. "We saw a very strong overall performance in our array business in the fourth quarter, demonstrating that arrays are going to continue to have utility in the market in years to come."

As evidence of this performance, Flatley noted that the company has generated $13 million from orders for its HumanCore BeadChips since their launch in October. Illumina is targeting biobanks, genome centers, and core labs with the new family of lower-complexity genotyping arrays (BAN 10/16/2012).

Q4 shipments of Illumina's Infinium genotyping arrays grew 6 percent year over year, and shipments of its custom arrays, in particular, were up 10 percent compared to the fourth quarter of last year. In addition, Flatley said that in Q4 Illumina received orders for chips to screen twice as many samples as it did in Q4 2011, but did not see an equivalent bump in revenue because customers continue to migrate toward lower-cost, lower-complexity, higher-multiplex arrays.

Cyto Submission Delayed

During his presentation, Flatley provided an update on Illumina's ambition to develop its presence in the market for reproductive health-related testing. He noted that the company continues to work with BlueGnome, a Cambridge, UK-based company that sells arrays for cytogenetic research and preimplantation genetic diagnosis, to develop a new generation of arrays for the cyto market. Illumina acquired BlueGnome in September (BAN 9/25/2012).

But the firm is also behind in its plan to submit a cyto-focused package to the US Food and Drug Administration for clearance. Illumina first disclosed plans to submit its cyto array product to the FDA three years ago (BAN 1/26/2010). Last year, the company said it intended to submit its chip to the agency by the end of 2012, leading some analysts to speculate that Illumina might achieve clearance for its offering ahead of rival Affymetrix, which has also announced plans to submit a cyto-focused array to the FDA for review (BAN 12/4/2012 ).

But, according to Flatley, Illumina's FDA submission will now likely occur by the end of the first quarter. He provided no reason for the delay.

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